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| Posted on: Wednesday, June 2, 2004 |
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The Department of Labor (DOL) issued final COBRA regulations May 26, 2004. Please refer to the link below for the full text of the final regulations and copies of the DOL model notices. These rules affect Plan Sponsors, COBRA administrators, participants and beneficiaries of group health plans and are effective for many Plans 1/1/05.
The purpose and scope of the final regulations are to set minimum standards for the timing (i.e. when notices must be sent and responded to) and content (substance required in administrative forms) of the four general types of notices required under COBRA:
1. The initial notice which the DOL calls the ’general notice’. This notice must be provided (mailed to the home address) when an employee is first enrolled in a plan subject to COBRA and not later than 90 days after coverage under the Plan(s) begin. A DOL model notice is provided.
2. The notice of a qualifying event by the Plan to an ’external’ COBRA administrator. A Plan must notify the administrator within 30 days of loss of coverage. The COBRA administrator then must notify a qualified beneficiary within 14 days using the Qualifying Event Notice. The 30-day period is not available for Plan sponsors who administer COBRA internally. DOL model notice not applicable.
3. Notice that qualified beneficiaries must provide to plan administrators in events such as a divorce, a child no longer meeting plan eligibility requirements, entitlement to Medicare, etc.; and
4. Other notices that plan administrators must provide to qualified beneficiaries. This includes:
• ’Qualifying Event Notice’ of COBRA eligibility and election form. See #2 above for timing requirement. DOL model notice provided
• ’Notice of Termination’ of current COBRA coverage. New requirement. Required when coverage will terminate earlier than the maximum period of COBRA coverage for reasons such as delinquent premium payments, termination of the Plan itself, participant becoming eligible for other coverage, etc. Must be sent to participant(s) “as soon as practicable.” DOL model notice not provided
• ’Notice of Unavailability’ of COBRA. New requirement. Required when, for example, a qualified beneficiary makes an untimely COBRA related notification to the Plan such as late notice of a divorce or elects COBRA beyond the 60-day election period, etc. must be sent within 14-days of the Plan sponsor’s determination that the participant(s) is ineligible for COBRA coverage. DOL model notice not provided.
What actions should Plan Sponsors/COBRA Administrators take in order to comply?
1. Review and revise existing policies, procedures and forms. Within the Federal Register Final regulations publication you’ll find the safe-harbor model notices for the Initial “general” Notice, as well as the Election Notice. Although plans are not required to use these model notices, ’the furnishing of appropriately and accurately completed model notices . . . will be considered by the [DOL] to constitute compliance with the requirements of the applicable notice regulation.’
2. Establish ’reasonable procedures’ for qualified beneficiaries to use in notifying the plan administrator when required. Specific requirements as to what constitutes reasonable procedures are stated in the regulations, including the requirement that such procedures be disclosed in the Plan’s Summary Plan Description. Plans may require covered employees and qualified beneficiaries to use certain forms as part of their ’reasonable procedures,’ if these forms are easily available, without cost, to covered employees and qualified beneficiaries.
3. Be aware of the DOL’s change in position regarding the deadline for a qualified beneficiary’s notice of disability to the Plan Administrator with regards to the availability of the 11-month disability extension. The Final regulations state that Qualified beneficiaries are given 60 days to provide the disability notice, now measured from the latest of:
• the date of the SSA’s disability determination;
• the date of the qualifying event;
• the date on which the qualified beneficiary would lose coverage under the plan; or
• the date on which the qualified beneficiary is informed of the obligation to provide
the disability notice through the plan’s SPD or initial notice.
CAUTION
This is not an exhaustive summary of the important changes found in the final regulations, but it should emphasize the need for your organization to begin to review and revise your COBRA policies, procedures and forms as soon as possible. If your organization uses an outside COBRA administrator, contact them to ensure they will be prepared to meet the compliance effective date because the Plan Sponsor is ultimately responsible for COBRA compliance.
This is just another example of the ever-evolving nature of employee benefits compliance requirements. Fortunately, once the proper procedures are in place and followed consistently, COBRA is a very manageable benefit plan administrative requirement.
For further details and copies of the final and proposed regulations – refer to the links below.
Final Regulations with Sample Model Notices
Proposed Regulations
DOL News Release
Should you have any additional employee benefit questions or would like to discuss this material in detail, please don’t hesitate to call the Denman Team.
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